News Release Details

Itamar Medical Reports Record Third Quarter 2020 Revenues

November 17, 2020 at 6:00 AM EST

- Third Quarter Revenues Increase 36% to $11.0 Million -

- U.S. WatchPATTMRevenues Increase 55% to $8.9 Million

-Full Year 2020 Revenue Guidance of $39.5 Million to $40.5 Million -

- Company to Host Conference Call Today at 8:00 am ET, 3:00 pm IT -

CAESAREA, Israel, Nov. 17, 2020 (GLOBE NEWSWIRE) --  Itamar Medical Ltd. (Nasdaq and TASE: ITMR), a medical technology company focused on the development and commercialization of non-invasive medical devices and solutions to aid in the diagnosis of respiratory sleep disorders, today reported unaudited financial results for the third quarter of 2020.

“We are very encouraged by our third quarter performance, driven by the persisting shift to home-based care with our WatchPAT ONE fully disposable product leading the growth. In fact, roughly 46% of the 500 sleep medicine practice members responding to a recent American Academy of Sleep Medicine survey are concerned about remaining financially solvent through the end of the year due to the impact of the coronavirus. We continue to see strong demand in the United States across almost all geographies and verticals led by cardiology and VA as well as key markets in Europe and Asia, with the one exception of U.S. dental volumes which are still lagging behind,” said Gilad Glick, President and Chief Executive Officer of Itamar Medical.

“As we approach year end, we are pleased with our progress on product innovation and market access programs, and we are looking forward to further reducing the barriers sleep apnea patients face in the coming years,” concluded Glick.

Third Quarter 2020 Highlights and Full Year 2020 Revenue Guidance

  • Revenues in the third quarter of 2020 were $11.0 million, an increase of 36% year-over-year.

  • U.S WatchPAT revenues in the third quarter of 2020 were $8.9 million, an increase of 55% year-over-year.

  • Active centers using WatchPAT ONE reached a total of 414 after continuing to onboard over 10 new customers per week on average throughout the third quarter.

  • On October 13, 2020, the Company reinstated it’s full year 2020 revenue guidance to a range of $39.5 million to $40.5 million, reflecting growth of approximately 26% to 29% over full year 2019 revenue of $31.3 million and growth of 31% to 34%, excluding a one-time $1.0 million sale in 2019 to Kaiser Permanente.

Third Quarter 2020 Financial Results

Revenues for the third quarter of 2020 increased 36% to $11.0 million, compared to $8.1 million in the same quarter in 2019. Revenue growth was driven by an increase in WatchPAT™ sales in the U.S. and Europe.

WatchPAT revenues for the third quarter of 2020 increased 39% to $10.5 million, compared to $7.6 million in the same quarter in 2019.

U.S. WatchPAT revenues for the third quarter of 2020 increased 55% to $8.9 million, compared to $5.8 million in the same quarter in 2019, driven primarily by WatchPAT ONE sales, as well as WatchPAT Direct sales. Sales from disposables and renewable products, including WatchPAT ONE, comprised approximately 73% of WatchPAT revenues in the U.S. in the third quarter of 2020, compared to 71% in the same quarter in 2019.

Gross profit for the third quarter of 2020 increased to $7.5 million, compared to $6.2 million in the same quarter in 2019. Gross margin for the third quarter of 2020 decreased to 68%, compared to 77% in the same quarter in 2019. Non-IFRS gross margin for the third quarter of 2020 decreased to 70%, compared to 79% in the same quarter in 2019) See “Use of Non-IFRS Measures” below(. Gross margin decline was mainly driven by the increase in WatchPAT ONE sales.

Operating loss for the third quarter of 2020 was $2.5 million, compared to $1.0 million in the same quarter in 2019. The increase in operating loss was primarily attributable to an increase in operating expenses, partially offset by the increase in revenues. Selling and marketing expenses increased 32% to $6.2 million, compared to $4.7 million in the same quarter in 2019, due to the planned expansion of the U.S. sales team into new geographical territories and verticals (32 territories and verticals as of September 30, 2020, compared to 27 territories and verticals as of September 30, 2019), as well as additional sales commissions resulting from the increase in revenues. Research and development expenses increased 26% to 1.4 million, compared to $1.1 million in the same quarter in 2019, driven by an increase in personnel to support product development, mainly related to our digital health platform. General and administrative expenses increased 71% to 2.4 million, compared to $1.4 million in the same quarter in 2019, driven by an increase in directors’ and officers’ insurance premium, as well as increase in legal expenses including a commercial dispute in defense of our IP initiated by the Company.

Non-IFRS operating loss for the third quarter of 2020 was $1.9 million, compared to $0.5 million in the same quarter in 2019. Non-IFRS operating loss excludes approximately $0.6 million in share-based payments; depreciation and amortization of property and equipment and intangible assets; and change in provision for doubtful and bad debt, compared to $0.5 million of similar expenses for the same quarter in 2019 (see “Use of Non-IFRS Measures” below).

Net loss for the third quarter of 2020 was $2.8 million, compared to $1.1 million in the same quarter in 2019.

Non-IFRS net loss for the third quarter of 2020 was $2.1 million, compared to $0.6 million in the same quarter in 2019. Non-IFRS net loss excludes approximately $0.7 million in share-based payments; depreciation and amortization of property and equipment and intangible assets; and change in provision for doubtful and bad debt, compared to $0.5 million of similar expenses and gains for the same quarter in 2019 (see “Use of Non-IFRS Measures” below).

As of September 30, 2020, the Company had cash, cash equivalents and short-term bank deposits of $41.2 million.

Nine Month Ended September 30, 2020 Financial Results

Revenues for the nine months ended September 30, 2020 increased 31% to $28.3 million, compared to $21.5 million for the nine months ended September 30, 2019. Revenue growth was driven mainly by an increase in WatchPAT sales in the U.S. and Japan.

WatchPAT revenues for the nine months ended September 30, 2020 increased 34% to $26.6 million, compared to $19.9 million for the nine months ended September 30, 2019.

U.S. WatchPAT revenues for the nine months ended September 30, 2020 increased 43% to $21.6 million, compared to $15.1 million for the nine months ended September 30, 2019. U.S. WatchPAT revenues increase was primarily driven by the increase of WatchPAT ONE, as well as WatchPAT Direct sales. Sales from disposables and renewable products, including WatchPAT ONE, comprised approximately 75% of WatchPAT revenues in the U.S. in the for the nine months ended September 30, 2020, compared to 70% for the nine months ended September 30, 2019.

Gross profit for the nine months ended September 30, 2020 increased to $19.9 million, compared to $16.6 million for the nine months ended September 30, 2019. Gross margin for the nine months ended September 30, 2020 decreased to 70%, compared to 77% for the nine months ended September 30, 2019. Non-IFRS gross margin for nine months ended September 30, 2020 decreased to 72%, compared to 79% for the nine months ended September 30, 2019 (See “Use of Non-IFRS Measures” below(. Gross margin decline was mainly driven by the increase in WatchPAT ONE sales.

Operating loss for the nine months ended September 30, 2020 was $7.7 million, compared to $4.0 million for the nine months ended September 30, 2019. The increase in operating loss was primarily attributable to an increase in operating expenses, partially offset by the increase in revenues. Selling and marketing expenses increased 34% to $17.4 million, compared to $13.0 million in the nine month ended September 30, 2019, due to the planned expansion of the U.S. sales team into new geographical territories and verticals, as well as additional sales commissions resulting from the increase in revenues. Research and development expenses increased 28% to $4.1 million, compared to $3.2 million in the nine months ended September 30, 2019, driven by an increase in personnel to support product development, mainly related to our digital health platform. General and administrative expenses increased 35% to 6.1 million, compared to $4.5 million in the nine months ended September 30, 2019, driven by an increase in directors’ and officers’ insurance premium, as well as legal expenses including a commercial dispute in defense of our IP initiated by the Company.

Non-IFRS operating loss for the nine months ended September 30, 2020 was $5.7 million, compared to $2.4 million for the nine months ended September 30, 2019. Non-IFRS operating loss excludes approximately $2.0 million in share-based payments; depreciation and amortization of property and equipment and intangible asset; change in provision for doubtful and bad debt; and expenses relating to reduction in manpower, compared to $1.6 million of similar expenses for the nine months ended September 30, 2019 (see “Use of Non-IFRS Measures” below).

Net loss for the nine months ended September 30, 2020 was $8.0 million, compared to $4.3 million for the nine months ended September 30, 2019.

Non-IFRS net loss for the for the nine months ended September 30, 2020 was $6.0 million, compared to $3.1 million for the nine months ended September 30, 2019. Non-IFRS net loss excludes approximately $2.0 million in share-based payments; depreciation and amortization of property and equipment and intangible assets; change in provision for doubtful and bad debt; expenses relating to reduction in manpower; and gain from reevaluation of derivatives, compared to $1.2 million of similar expenses and gains for the nine months ended September 30, 2019 (see “Use of Non-IFRS Measures” below).

Conference Call and Webcast Information

The Company will host a conference call today at 8:00 a.m. Eastern Time, 3:00 p.m. Israel Time to review financial results and provide a corporate update.

To listen live via webcast, please visit https://www.itamar-medical.com/, or by clicking here.

To participate via phone, please use the dial in information:
U.S. toll-free: 833-519-1272
International: 914-800-3844
Israel toll-free: 1-809-315-362
Conference ID: 7976547

Please log in approximately 10 minutes prior to the scheduled start time. An archived webcast also will be provided in the Events and Presentations section of the Company’s website.

Use of Non-IFRS Measures

In addition to disclosing financial results prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standard Board (IASB), this press release contains Non-IFRS financial measures for operating loss and net loss, which are adjusted from results based on IFRS to exclude: (i) share-based payments; (ii) depreciation and amortization of property and equipment and intangible assets; (iii) change in provision for doubtful and bad debt; (iv) expenses relating to reduction in manpower; and (v) gain from reevaluation of derivatives. Management believes that the Non-IFRS financial measures provided in this press release are useful to investors’ understanding and assessment of the Company’s performance. Management uses both IFRS and Non-IFRS measures when operating and evaluating the Company’s business internally and therefore decided to make these Non-IFRS adjustments available to investors. The presentation of this Non-IFRS financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with IFRS. For further details, see a reconciliation of operating loss and net loss on an IFRS basis to a Non-IFRS basis that is provided in the table that accompanies this press release.

About Itamar Medical Ltd.

Itamar Medical is a medical technology company focused on the development and commercialization of non-invasive medical devices and solutions to aid in the diagnosis of respiratory sleep disorders. Itamar Medical commercializes a digital healthcare platform to facilitate the continuum of care for effective sleep apnea management with a focus on the core sleep, cardiology and direct to consumer markets. Itamar Medical offers a Total Sleep Solution to help physicians provide comprehensive sleep apnea management in a variety of clinical environments to optimize patient care and reduce healthcare system costs. The Company’s key product, WatchPAT, is commercially available within major markets including the U.S., Japan and Europe. Itamar Medical is a public company traded on the Nasdaq and on the Tel Aviv Stock Exchanges, and is based in Caesarea, Israel with U.S. headquarters based in Atlanta, GA. For additional information visit www.itamar-medical.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and other applicable securities laws. Statements preceded by, followed by, or that otherwise include the words "believes", "expects", "anticipates", "intends", "estimates", "plans", and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. For example, when we discuss the 2020 revenue guidance range, we are using forward-looking statements. Because such statements deal with future events, they are subject to various risks, uncertainties and assumptions, including events and circumstances out of Itamar Medical's control and actual results, expressed or implied by such forward-looking statements, could differ materially from Itamar Medical's current expectations. Factors that could cause or contribute to such differences include, but are not limited to, risks, uncertainties and assumptions discussed from time to time by Itamar Medical in reports filed with, or furnished to, the U.S. Securities and Exchange Commission (SEC) and the Israel Securities Authority (ISA), including the Company’s latest Annual Report on Form 20-F, which is on file with the SEC (accessible at www.sec.gov) and the ISA. Except as otherwise required by law, Itamar Medical undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Itamar Medical Investor Relations Contact (U.S.)
Leigh Salvo or Caroline Paul
Gilmartin Group
Phone: +1-415-937-5412
investors@itamar-medical.com

* The contents of any website or hyperlinks mentioned in this press release are for informational purposes and the contents thereof are not part of this press release.

ITAMAR MEDICAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited)

 September 30,
2020
December 31,
2019
 U.S. dollars in thousands
Assets  
Current assets  
Cash and cash equivalents$25,153 $15,115 
Short-term bank deposits 16,000  - 
Trade receivables 8,363  8,384 
Other receivables 1,944  1,404 
Inventories 6,476  3,363 
Total current assets 57,936  28,266 
   
Non-current assets  
Long-term restricted deposits and prepaid expenses 531  476 
Long-term trade receivables 381  156 
Property and equipment 2,625  1,472 
Intangible assets 855  395 
Right-of-use assets 1,740  2,442 
Total non-current assets 6,132  4,941 
Total assets$64,068 $33,207 
   
Liabilities  
Current liabilities  
Short-term bank loan$5,000 $5,000 
Current maturities of lease liabilities 786  890 
Trade payables 3,389  2,028 
Other accounts payable 3,513  3,455 
Accrued expenses 1,682  1,317 
Provisions 383  273 
Short-term employee benefits 657  352 
Total current liabilities 15,410  13,315 
   
Non-current liabilities  
Lease liabilities, net of current maturities 1,144  1,708 
Recognized liability for defined benefit plan, net 216  260 
Other long-term liabilities 1,262  1,260 
Total non-current liabilities 2,622  3,228 
Total liabilities 18,032  16,543 
   
Equity   
Ordinary share capital 1,136  878 
Additional paid-in capital 161,456  125,435 
Accumulated deficit (116,556) (109,649)
Total equity  46,036  16,664 
Total liabilities and equity $64,068 $33,207 
   

ITAMAR MEDICAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 Three Months Ended
September 30,
Nine Months Ended
September 30,
  2020  2019  2020  2019 
 U.S. dollars in thousands (except per share and ADS data)
     
Revenues$10,999 $8,084 $28,262 $21,493 
Cost of revenues 3,471  1,840  8,390  4,869 
Gross profit 7,528  6,244  19,872  16,624 
Operating expenses:    
Selling and marketing expenses 6,240  4,717  17,446  12,985 
Research and development expenses 1,385  1,095  4,064  3,165 
General and administrative expenses 2,417  1,411  6,051  4,491 
Total operating expenses 10,042  7,223  27,561  20,641 
Operating loss (2,514) (979) (7,689) (4,017)
Financial income (expenses):    
Financial income 143  143  530  336 
Financial expenses (293) (299) (693) (895)
Gain from derivatives instruments, net -  -  -  442 
Financial expenses, net (150) (156) (163) (117)
Loss before taxes on income (2,664) (1,135) (7,852) (4,134)
Taxes on income (95) (12) (147) (135)
Net loss $(2,759)$(1,147)$(7,999)$(4,269)
     
Loss per share – basic and diluted (in U.S.
dollars)
$(0.01)$(0.00)$(0.02)$(0.01)
     
Weighted average number of shares used
in computation of loss per shares (in
thousands):
    
Basic 424,010  333,902  412,480  332,069 
Diluted 424,010  333,902  412,480  350,182 
     
Loss per ADS (in U.S. dollars)     
Basic$(0.20)$(0.10)$(0.58)$(0.39)
Diluted$(0.20)$(0.10)$(0.58)$(0.40)
     
Weighted average number of ADSs used
in computation of loss per ADS (in
thousands):
    
Basic 14,134  11,130  13,749  11,069 
Diluted 14,134  11,130  13,749  11,673 
     

ITAMAR MEDICAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 Three Months Ended
September 30,
Nine Months Ended
September 30,
  2020   2019  2020  2019 
     U.S. dollars in thousands
    
Cash flows from operating activities      
Net loss$(2,759)$(1,147)$(7,999)$(4,269)
Adjustments for:    
Depreciation and amortization 456  385  1,345  1,059 
Share-based payment 372  355  1,043  886 
Change in provision for doubtful and bad debt 48  (2) 206  192 
Net financial cost (income) (18) (3) (217) 169 
Gain from reevaluation of derivatives -  -  -  (442)
Decrease (increase) in trade receivables (867) 388  (411) 329 
Increase (decrease) in other accounts receivable 63  (59) (541) (249)
Increase in inventories (1,958) (633) (3,773) (1,153)
Increase in trade payables 782  199  1,362  724 
Increase in other accounts payable and accrued expenses 754  270  328  584 
Increase (decrease) in employee benefits 65  (27) 310  102 
Increase in provisions 49  10  110  17 
Income tax expenses 95  12  147  135 
Taxes paid during the period (19) -  (49) (44)
Net interest received (paid) during the period 30  (23) 83  (197)
Net cash used in operating activities (2,907) (275) (8,056) (2,157)
Cash flows from investing activities    
Investment in short-term bank deposits (8,500) -  (16,000) (9,000)
Investment in restricted long-term deposits -  (68) (50) (68)
Purchase of property and equipment, intangible
assets and capitalization of development expenditure
 (895) (144) (1,604) (406)
Net cash used in investing activities (9,395) (212) (17,654) (9,474)
Cash flows from financing activities    
Proceeds from issuance of shares, net of share issuance costs (share issuance costs) (38) -  36,147  13,966 
Repayment of principal of lease liabilities (220) (146) (665) (583)
Issuance of shares due to the exercise of stock options 51  -  132  25 
Net cash provided by (used in) financing activities (207) (146) 35,614  13,408 
Increase (decrease) in cash and cash equivalents (12,509) (633) 9,904  1,777 
Cash and cash equivalents at beginning of period 37,666  9,016  15,115  6,471 
Effect of exchange rate fluctuations on balances of cash and cash equivalents (4) 43  134  178 
Cash and cash equivalent balance at end of period$25,153 $8,426 $25,153 $8,426 
     

ITAMAR MEDICAL LTD.
RECONCILIATIONS OF IFRS TO NON-IFRS FINANCIAL MEASURES
(Unaudited)

 Three Months Ended
September 30,
Nine Months Ended
September 30,
 
  2020  2019  2020  2019  
  U.S. dollars in thousands (except per share and ADS data)
  
      
IFRS operating loss$(2,514)$    (979)$(7,689)$(4,017) 
IFRS net loss$(2,759)$(1,147)$(7,999)$(4,269) 
      
Cost of revenues:     
Share-based payment 10  3  17  7  
Depreciation and amortization of property and
equipment and intangible assets
 152  105  416  274  
Expenses relating to reduction of manpower -  -  27  -  
  162  108  460  281  
Operating expenses:     
Selling and marketing:     
Share-based payment 142  129  341  298  
Depreciation and amortization of property and
equipment and intangible assets
 34  14  102  72  
Expenses relating to reduction of manpower -  -  63  -  
  176  143  506  370  
Research and development:     
Share-based payment 70  47  212  101  
Depreciation and amortization of property and
equipment and intangible assets
 29  34  79  62  
Expenses relating to reduction of manpower -  -  18  115  
  99  81  309  278  
General and administrative:     
Share-based payment 144  170  454  462  
Depreciation and amortization of property and
equipment and intangible assets
 19  14  53  41  
Change in provision for doubtful and bad debt 48  (2) 206  192  
Expenses relating to reduction of manpower -  -  9  -  
  211  182  722  695  
Financial income (expenses), net:     
Share-based payment 6  6  19  18  
Gain from reevaluation of derivatives -  -  -  (442) 
  6  6  19  (424) 
      
Non-IFRS operating loss$(1,866)$   (465)$(5,692)$(2,393) 
Non-IFRS net loss$(2,105)$   (627)$(5,983)$(3,069) 
      
IFRS loss per ADS (in U.S. dollars):    
Basic$(0.20)$(0.10)$(0.58)$(0.39)  
Diluted$(0.20)$(0.10)$(0.58)$(0.40)  
      
Non-IFRS loss per ADS – basic and diluted
(in U.S. dollars)
     
Basic$(0.15)$(0.06)$(0.44)$(0.28) 
Diluted$(0.15)$(0.06)$(0.44)$(0.29)